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Week 21 (2020)

Week of May 18 through May 21, 2020

Bing v. Brivo Sys., LLC (Traxler 5/19/2020; Quattlebaum 5/19/2020): The Fourth Circuit held that the factual allegations in Robel Bing’s (plaintiff-appellant) complaint failed to state a plausible claim of race discrimination after he was terminated when a supervisor, at Brivo Systems (defendant-appellee), learned Bing was involved in a shooting after doing a Google search of his name. Bing’s complaint, the two-judge majority reasoned, failed to plead facts that would lead a court to infer that his termination was because of race. The court affirmed the district court’s (Xinis) decision, granting Brivo’s 12(b)(6) motion. Full Opinion

Highlight Case

CSX Transp., Inc. v. S.C. Dep’t of Revenue

  • Majority Opinion: Thacker
  • Submitted: March 26, 2020
  • Decided: May 20, 2020

The Fourth Circuit held that South Carolina failed to justify its exclusion of railroads from a state law that caps the amount that appraisal values on commercial and industrial properties can increase, in a five-year period, at 15%.

Under South Carolina law, counties or the State must appraise properties once every five years. See S.C. Code Ann. § 12-43-217. The South Carolina Real Property Valuation Reform Act (“SCVA”) caps increases in appraisal values for commercial and industrial properties within a five-year period at 15%. Id. § 12-37-3140(B). Railroads, however, are excluded from the SCVA cap. Between 2007 and 2012, CSX claimed, its appraisal value increased by 51%. Therefore, CSX sued the State, claiming that the SCVA cap discriminates against railroads in violation of federal law. See 49 U.S.C. § 11501(b) (2012).

Because this was the second time the dispute was before the Fourth Circuit—the first ended with the court concluding that the SCVA cap is a tax and remanded the case to be resolved—the only issue before the court was whether the State could provide a sufficient justification for its discriminatory tax against railroads.

The Fourth Circuit began its analysis by determining the relevant comparison class in which it would compare the tax treatment of railroads. The court relied on the Supreme Court’s ordinary meaning interpretation of “discrimination” and concluded that commercial and industrial taxpayers in the state are the relevant comparison class. With the comparison class determined, the court turned to the State’s justifications for treating railroads differently than commercial and industrial taxpayers.

South Carolina offered three justifications for treating railroads differently. First, the state argued that the SCVA’s exclusion of railroads is justified because railroads benefit from a 20% equalization factor on the assessed value of property. But the court rejected that justification. The court distinguished between the equalization factor that applies to the assessed value of property from the SCVA cap that applies to the appraisal value of property. For railroads, the court explained, the appraisal value is determined first and then the assessment value is determined. Because the equalization factor applies to the assessed value of property, the court reasoned that the equalization factor failed to justify treating railroads differently since the equalization factor does not apply to appraisal value.

Second, South Carolina argued that the exclusion of railroads from the SCVA’s 15% cap is justified because other tax exemptions railroads get offset their exclusion from the SCVA cap. But the court also rejected that justification. The court relied on the Eleventh Circuit’s interpretation of “roughly equivalent,” CSX Transp., Inc. v. Ala. Dep’t of Revenue, 888 F.3d 1163, 1179 (11th Cir. 2018), and concluded that the State failed to provide sufficient evidence that the tax exemptions were roughly equivalent to the SCVA cap.

Third, South Carolina argued that railroads, unlike commercial and industrial taxpayers, are often not subject to the State’s Assessable Transfers of Interest (ATI). Further, the State argued that railroad property is rarely reassessed at fair market value. Those two claims, the State argued, justified the exclusion of railroads from the SCVA cap. But those arguments backfired when the court pointed out that ATI assessments contain a 25% tax exemption that decreases the fair market value assessment of property for commercial and industrial taxpayers, which does not apply to railroads. In rejecting the State’s justification, the court concluded that “we fail to see how a higher ATI assessment for railroads justifies the denial of the SCVA appraisal cap.”

The Fourth Circuit concluded, therefore, that South Carolina failed to justify its discriminatory tax on railroads. The court reversed and remanded the district court’s (Seymour) decision.

Full Opinion

Tim Lorick